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Frontier's Markets: Sales based allocations

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Sales-Based Allocations
Frontier's Markets has three grocery stores in the metropolitan Salt Lake area. Central costs are allocated using sales as the cost-allocation base. The following are budgeted and actual sales during November:

Sunnyville Wedgewood Capital
Budgeted sales $600,000 $1,000,000 $400,000
Actual sales 600,000 700,000 500,000

Central costs of $180,000 are to be allocated in November.

1. Compute the central costs allocated to each store with budgeted sales as the cost-allocation base.
2. Compute the central costs allocated to each store with actual sales as the cost-allocation base.
3. What advantages are there to using budgeted rather than actual sales for allocating the central costs?

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This solution is comprised of a detailed explanation to compute the central costs allocated to each store with budgeted sales as the cost-allocation base.

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Sales-Based Allocations
Frontier's Markets has three grocery stores in the metropolitan Salt Lake area. Central costs are allocated using sales as the cost-allocation base. The following are budgeted and actual sales during November:

Sunnyville Wedgewood Capital Total
Budgeted sales $600,000 $1,000,000 ...

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